Dodgy developers may face jail - Govt

Monday 1 November 2004

Property developers who collapse their companies and avoid liabilities could be severely punished under proposed new laws, but that offers little solace for a group of Auckland homeowners.

By The Landlord

The Newmarket residents want to sue the developer of their apartment block, which was so badly struck by leaky home syndrome some balconies had to be pulled down. But they have been stymied because the firm no longer exists.

They cannot believe its directors - under a new company name - are now preparing to build again, right next door.

Such tactics are not uncommon in the building industry, but have been targeted by the Ministry of Economic Development as needing serious attention.


The government's proposals, which will not come into force until after 2006, include a blanket ban on directors quitting one company then starting another with a similar or the same name.

Under the proposals, directors who act against the interests of creditors could be liable for a fine of up to $200,000 or up to five years' prison.

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